Budget 2023- Updates for EV Industry and Transportation Industry
On Feb 1st, 2023, Finance Minister Nirmala Sitaraman presented the Union Budget 2023-24 at Parliament, New Delhi. She announced that "green growth" is one of seven priorities referred as Saptrishi set by the Union government, which include financial sector reform and support, inclusive growth, and promotion of infrastructure and production investment.
During the 75th anniversary of India's independence, the world saw India as a "shining star" with an economic growth rate of about 7%, the highest of any major economy, despite the slowdown in global economic growth. As per the announcement made by Finance Minister Nirmala Sitharaman, despite the difficulties, the Indian economy is on the right track and moving toward a brighter future.
Major Highlights: Exemption from Custom duty
The 2023 Union budget will eliminate excise taxes on capital goods and equipment which is used in the making of lithium-ion cells in electric vehicle (EV) batteries. The exemption from customs duty would help lower the cost of electric vehicles in India.
“To further boost the green movement and push the adoption rate of EVs, the excise duty exemption will be extended to imports of capital goods and equipment needed to make lithium-ion cells in electric vehicle batteries,” said Finance Minister Nirmala Sitharaman during the presentation of the Union Budget.
Major Highlights: Viability Gap Funding
The government of India has pledged to help build the 4,000 MWh battery project from the union budget, saying it will also include support for pumping hydro. Under this Green Growth Priority Program, the Ministry of Oil and Gas will provide INR 350 billion ($4.28 billion) for equity investments in Net Zero Agenda projects and energy transition.
Finance Minister Nirmala Sitharaman also reiterated India's commitment towards the national green hydrogen mission after an equally successful solar program. By investing INR 197 billion ($2.4 billion) in hydrogen missions, India aims to produce 5 million tons of green hydrogen annually by 2030. Major funding will also be provided to a 13-gigawatt interstate renewable energy transmission project in northeastern Ladakh and to a so-called "green credit" program to encourage "green and sustainable behavior".
As per the CEO of BCT digital, Jaya Vaidhyanathan, by considering green growth as a key fiscal pillar, the FM paves the way for sustainable economic development, aligns with global efforts to mitigate climate change, and supports wider environmental, social, and governance initiatives [ESG ]. Green growth includes initiatives such as promoting renewable energy and adopting more sustainable practices, which contribute to a company's broader environmental, social and governance (ESG) initiatives.
Major Highlights: Indirect Tax Proposal
The indirect tax proposals unveiled in the budget by Finance Minister emphasized simplifying the tax structure with lower tax rates to reduce compliance burden and bring an improvement in tax administration. The number of basic excise taxes on goods other than textiles and agricultural products was reduced from 21% to 13%. There were minor changes to basic duties, taxes, levies on automobiles, and others.
Industry’s opinions about the Budget 2023
Vinod Agarwal, president of the Association of Indian Automobile Manufacturers (Automobile industry body Society), said that the 33% increase in capital spending along with Rs.13.7 lakh crore will speed up the economic development and also development in the automobile industry. Another notable feature of the budget is that it effectively lowers the personal income tax rate, putting more money into the hands of individuals. This should lead to more consumption and more demand.
Saloni Roy, partner at Deloitte India said that the exemption in customs duty on the import of goods/machinery and lithium-ion batteries for electric vehicles will promote the government's agenda of sustainability. This will promote domestic production and increase national value and will help in the development of green energy. This will reduce the cost of import duties and make electric vehicles more affordable.
